United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(D) OR THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 000-21825
STREICHER MOBILE FUELING, INC.
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(Exact name of registrant as specified in its charter)
Florida 65-0707824
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(State of Incorporation) (IRS Employer Identification
Number)
2720 NW 55th Court, Fort Lauderdale, Florida, 33309
(Address of principal executive offices) (Zip Code)
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(954) 739-3880
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(Issuer's telephone number, including area code)
Check whether the issuer filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required requirements for the past 90
days. Yes [X]. No [ ].
As of September 14, 2000, 2,712,600 shares of the issuer's common stock
were outstanding.
<PAGE>
STREICHER MOBILE FUELING, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Form 10-Q Part and Item No.
---------------------------
<S> <C>
Part I-Financial Information
Item 1. Unaudited Financial Statements
Consolidated Balance Sheets as of July 31, 2000 and January 31, 2000...................3
Consolidated Statements of Operations for the three and six months ended July
31, 2000 and 1999......................................................................4
Consolidated Statements of Cash Flows for the six months ended July 31, 2000
and 1999...............................................................................5
Notes to Consolidated Financial Statements.............................................6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................................7
Part II - Other Information
Items 1 - 6....................................................................................10
Signature Page.................................................................................11
</TABLE>
2
<PAGE>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS July 31, 2000 January 31, 2000
--------------------------------------------------------------------- -------------- ----------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents......................................... $ 1,060,031 $ 874,972
Accounts receivable, net of allowance for doubtful accounts of
$43,600 and $111,600 respectively............................... 8,263,873 9,587,686
Inventories....................................................... 244,388 434,871
Prepaid expenses and other current assets......................... 233,310 476,581
-------------- -------------
Total current assets 9,801,602 11,374,110
Property and Equipment:
Land.............................................................. 249,302 249,302
Leasehold improvements............................................ 189,684 189,684
Fuel trucks and automobiles....................................... 14,151,522 12,280,350
Machinery and equipment........................................... 977,648 956,980
Furniture and fixtures............................................ 81,000 79,157
Construction in process........................................... 684,068 1,328,113
-------------- -------------
16,333,224 15,083,586
Less accumulated depreciation and amortization (3,746,151) (3,098,177)
-------------- -------------
12,587,073 11,985,409
Note receivable from related party................................... 519,139 500,952
Other assets......................................................... 61,011 70,453
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Total assets.................................................... $ 22,968,825 $ 23,930,924
============== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
--------------------------------------------------------------------
Current Liabilities:
Bank line of credit payable....................................... $ 7,730,464 $ 7,679,219
Current portion of long-term debt................................. 1,979,528 1,560,893
Accounts payable.................................................. 2,474,392 3,058,460
Accrued expenses.................................................. 611,047 753,114
Customer deposits................................................. 119,895 119,895
-------------- -------------
Total current liabilities....................................... 12,915,326 13,171,581
Long-term Liabilities:
Long-term debt, excluding current portion......................... 6,421,606 6,470,171
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Total liabilities............................................... 19,336,932 19,641,752
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Shareholders' Equity:
Preferred stock................................................... -- --
Common stock...................................................... 27,126 27,104
Additional paid-in capital........................................ 5,557,865 5,651,500
Accumulated deficit............................................... (1,953,098) (1,389,432)
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Total shareholders' equity...................................... 3,631,893 4,289,172
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Total liabilities and shareholders' equity...................... $ 22,968,825 $ 23,930,924
============== =============
</TABLE>
3
<PAGE>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTH PERIODS ENDED
JULY 31, 2000 AND 1999
<TABLE>
<CAPTION>
Three Month Period Six Month Period
Ended July 31, Ended July 31,
------------------------------- -------------------------------
2000 1999 2000 1999
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Fuel sales and service revenues............. $ 15,414,296 $ 11,826,904 $ 31,851,803 $ 21,821,265
Fuel taxes.................................. 5,335,367 5,903,118 11,184,705 11,426,389
------------- -------------- ------------- --------------
Total revenues......................... 20,749,663 17,730,022 43,036,508 33,247,654
Cost of fuel sales and service.............. 14,261,825 10,328,457 30,221,902 18,924,426
Fuel taxes.................................. 5,335,367 5,903,118 11,184,705 11,426,389
------------- -------------- ------------- --------------
Total cost of sales.................... 19,597,192 16,231,575 41,406,607 30,350,815
Gross profit........................... 1,152,471 1,498,447 1,629,901 2,896,839
Operating expenses 628,093 976,883 1,425,764 1,889,953
------------- -------------- ------------- --------------
Operating income (loss)................ 524,378 521,564 204,137 1,006,886
Loss on disposal of assets.................. -- (794) -- (3,385)
Interest expense............................ (403,699) (259,097) (797,115) (502,646)
Interest and other income................... 13,196 19,096 29,313 30,035
------------- -------------- ------------- --------------
Income (loss) before income taxes...... 133,875 280,769 (563,665) 530,890
Income tax expense.......................... -- -- -- --
------------- -------------- ------------- --------------
Net income (loss)...................... $ 133,875 $ 280,769 $ (563,665) $ 530,890
============= ============== ============= ==============
Basic income (loss) per share............... $ 0.05 $ 0.11 $ (0.21) $ 0.21
============= ============== ============= ==============
Diluted income (loss) per share............. $ 0.05 $ 0.10 $ (0.21) $ 0.20
============= ============== ============= ==============
Basic weighted average common shares
outstanding.............................. 2,712,600 2,592,172 2,712,600 2,583,728
============= ============== ============= ==============
Diluted weighted average common shares
outstanding.............................. 2,716,644 2,767,124 2,712,600 2,673,334
============= ============== ============= ==============
</TABLE>
4
<PAGE>
STREICHER MOBILE FUELING, INC, AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED JULY 31, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).................................................... $ (563,665) $ 530,890
Adjustments to reconcile net loss to net cash used in operating
activities:
Loss on disposal of equipment........................................ -- 3,385
Depreciation and amortization........................................ 647,974 496,802
Provision for doubtful accounts...................................... 45,000 32,500
Changes in operating assets and liabilities:
(Increase) Decrease in accounts receivable......................... 1,278,813 (1,908,430)
(Increase) Decrease in inventories................................. 190,483 (42,378)
(Increase) Decrease in prepaid expenses and other current assets... 243,271 (39,844)
(Increase) Decrease in other assets................................ 9,442 (30,375)
Increase (Decrease) in accounts payable and accrued expenses....... (726,135) 628,170
------------ ------------
Net cash provided by (used in) operating activities................ 1,125,183 (329,280)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment.................................. (1,249,638) (736,217)
Proceeds from disposal of equipment.................................. -- 30,609
Collections of (Advances on) related party note...................... (18,187) 108
------------ ------------
Net cash used in investing activities.............................. (1,267,825) (705,500)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit.................................. 51,244 1,716,213
Borrowings under long-term debt...................................... 1,268,136 533,812
Principal payments on long-term debt................................. (898,066) (748,739)
Proceeds from issuance of common stock............................... 8,118 90,216
Reduction of net proceeds from previous issuance of common stock..... (101,731) --
------------ ------------
Net cash provided by financing activities.......................... 327,701 1,591,502
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NET INCREASE IN CASH AND CASH EQUIVALENTS............................... 185,059 556,722
CASH AND CASH EQUIVALENTS, beginning of period.......................... 874,972 122,961
------------ ------------
CASH AND CASH EQUIVALENTS, end of period................................ $ 1,060,031 $ 679,683
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for-
Interest........................................................... $ 793,622 $ 492,964
============ ============
Income taxes....................................................... $ -- $ --
============ ============
</TABLE>
5
<PAGE>
STREICHER MOBILE FUELING, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) NATURE OF OPERATIONS
The Company provides mechanized mobile fleet fueling and electronic
fuel management primarily to customers that operate large fleets of vehicles
(such as governmental agencies, utilities, major trucking lines, hauling and
delivery services, and national courier services). At July 31, 2000, the Company
had operations in Florida, Georgia, Tennessee, California and Texas.
(2) BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Streicher
Mobile Fueling, Inc. and its wholly owned subsidiaries, Streicher West, Inc.,
Streicher Realty, Inc. and Mobile Computer Systems, Inc. All significant
intercompany balances and transactions have been eliminated in consolidation.
The unaudited consolidated financial statements included herein have
been prepared in accordance with the instructions to Form 10-Q and do not
include all the information and footnotes required by generally accepted
accounting principles; however, they do include all adjustments of a normal
recurring nature which, in the opinion of management, are necessary to present
fairly the results of operations of the Company for the interim periods
presented. Certain amounts have been reclassified to conform with current
quarter presentation. These interim financial statements should be read in
conjunction with the Company's audited financial statements and related notes
for the year ended January 31, 2000 included in the Company's Annual Report on
Form 10-K for the year ended January 31, 2000. The results of operations for the
interim periods presented are not necessarily indicative of the results to be
expected for the entire year.
(3) COMMITMENTS AND CONTINGENCIES
At July 31, 2000, the Company had a purchase commitment, exercisable
over the next month, for one custom fuel delivery vehicle costing approximately
$160,000.
(4) EARNINGS (LOSS) PER SHARE
Basic earnings per share are computed by dividing income available to
common shareholders by the weighted-average number of common shares outstanding
during the period. Diluted earnings per share are computed by dividing income
available to common shareholders by the weighted-average number of common shares
outstanding during the period increased to include the number of additional
common shares that would have been outstanding if the dilutive potential common
shares had been issued. The dilutive effect of outstanding options is reflected
in diluted earnings per share by application of the treasury stock method. For
loss periods, weighted average common share equivalents are excluded from the
calculation as their effect would be antidilutive.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Form 10-Q contains "forward-looking statements" which involve
risks and uncertainties. The Company's actual results could differ materially
from those in the forward-looking statements as a result of certain factors,
including those set forth under the caption "Certain Factors Affecting Future
Operating Results" in Item 7 of the Company's Annual Report in Form 10-K for the
fiscal year ended January 31, 2000. The following Management's Discussion and
Analysis of Financial Condition and Results of Operations should be read in
conjunction with the Company's financial statements and notes thereto included
elsewhere in this Form 10-Q and the above described factors set forth in the
Company's Form 10-K.
General
The Company derives all of its revenue from providing mobile fueling
services. Revenue is comprised principally of sales of gasoline and diesel fuel
and related delivery charges. Cost of sales is comprised principally of the cost
of fuel and delivery costs (primarily payroll and equipment costs). Included in
both revenue and cost of sales are Federal and state fuel taxes, which are
generally paid by the Company when it pays for its fuel and are billed by the
Company to its customers upon billing for the related fuel and delivery charges.
Results of Operations
Three Months Ended July 31, 2000 Compared to Three Months Ended July
31, 1999
Revenues
Revenues for the three months ended July 31, 2000 increased 16.95% to
$20.7 million, compared to $17.7 million for the same quarter a year ago. This
increase was due primarily to increases in the average wholesale price per
gallon of gasoline and diesel fuel. For the three months ended July 31, 2000,
the Company delivered 15.0 million gallons of fuel compared to 14.9 million
gallons for the same quarter of the prior year, an increase of .67%. The
Company's revenue levels will fluctuate based on the cost of fuel in a given
period. The Company's sales price to its customers is adjusted upward or
downward for increases or decreases in fuel costs each week. Significant changes
in revenue levels between periods are possible even if the volume of fuel
delivered remains relatively stable.
Gross Profit
Gross profit for the three months ended July 31, 2000 decreased 20.0%,
to $1.2 million, compared to $1.5 million for the same quarter a year ago. This
decrease is primarily due to declines in mobile fueling service margins, higher
procurement costs for fuel, which were not passed on to customers, and
depreciation and insurance costs associated with the Company's expansion of its
delivery fleet. The gross profit per gallon on fuel sold in the three months
ended July 31, 2000 was 7.67 cents compared to a gross profit per gallon of
10.03 cents for the same period a year ago.
Operating Expenses
Operating expenses for the three months ended July 31, 2000 decreased
35.72%, to $628,000 compared to $977,000 for the same quarter a year ago. This
decrease is primarily attributable to decreases in payroll and related
administrative costs and reductions of marketing related costs and
financial/public relations fees.
Interest Expense
Interest expense for the three months ended July 31, 2000 increased
55.98%, to $404,000, compared to $259,000 for the same quarter a year ago. This
increase is a result of increases in interest rates and increases in the
Company's outstanding borrowings for the purchase of additional equipment and to
provide funds necessary to support increases in sales.
7
<PAGE>
Income Taxes
The Company recognized no income tax benefit or expense for the three
months ended July 31, 2000 or 1999. The Company has sufficient net operating
loss carryforwards to offset its current period earnings.
Net Income (Loss)
Net income for the three months ended July 31, 2000 was $134,000 or
$.05 per share, compared to net income of $281,000 or $.11 per share for the
three months ended July 31, 1999. The decrease in net income is due to the
combination of factors discussed above.
Six Months Ended July 31, 2000 Compared to Six Months Ended July 31, 1999
Revenues
Revenues for the six months ended July 31, 2000 increased 29.52% to
$43.0 million, compared to $33.2 million for the same period a year ago. This
increase was due primarily to an increase in volume of fuel delivered and
increases in the average wholesale price per gallon of gasoline and diesel fuel.
For the six months ended July 31, 2000, the Company delivered 30.0 million
gallons of fuel compared to 28.8 million gallons for the same period of the
prior year, an increase of 4.17%. The increase in volume was attributable to an
increase in services to existing customers and acquisition of new customers in
existing locations. The Company's revenue levels will fluctuate based on the
cost of fuel in a given period. The Company's sales price to its customers is
adjusted upward or downward for increases or decreases in fuel costs each week.
Significant changes in revenue levels between periods are possible even if the
volume of fuel delivered remains relatively stable.
Gross Profit
Gross profit for the six months ended July 31, 2000 decreased 44.83%,
to $1.6 million, compared to $2.9 million for the same period a year ago. This
decrease is primarily due to declines in mobile fueling service margins, higher
procurement costs for fuel, which were not passed on to customers, and increased
depreciation and insurance costs associated with the Company's expansion of its
delivery fleet. The gross profit per gallon on fuel sold in the six months ended
July 31, 2000 was 6.44 cents compared to a gross profit per gallon of 10.05
cents for the same period a year ago.
Operating Expenses
Operating expenses for the six months ended July 31, 2000 decreased
26.32%, to $1.4 million, compared to $1.9 million for the same period a year
ago. This decrease is primarily attributable to decreases in payroll and related
administrative costs, decreases in marketing expenses and other costs and
decreases in financial/public relations fees.
Interest Expense
Interest expense for the six months ended July 31, 2000 increased
58.45%, to $797,000, compared to $503,000 for the same period a year ago. This
increase is a result of increases in interest rates and increases in the
Company's outstanding borrowings for the purchase of additional equipment and to
provide the funds necessary to support increases in sales.
Income Taxes
The Company recognized no income tax benefit or expense for the six
months ended July 31, 2000 or 1999. The Company has sufficient net operating
loss carryforwards to offset its current period earnings.
8
<PAGE>
Net Income (Loss)
Net loss for the six months ended July 31, 2000 was $564,000 or $.21
per share, compared to net income of $531,000 or $.21 per share for the same
period a year ago. The decrease in net income is due to the combination of
factors discussed above.
Liquidity and Capital Resources
The Company's business requires it to expend considerable amounts of
funds for fuel, labor and equipment costs before any payments are received from
the Company's customers. The fuel purchased by the Company for resale to its
customers must generally be paid for within 10 to 15 days of purchase, labor
costs and related taxes are funded bi-weekly and equipment related costs are
generally satisfied within 30 days. The Company bills its customers weekly and
generally collects the majority of its accounts within 35 to 40 days. Days sales
outstanding at July 31, 2000 totaled 35 days as compared to 38 days sales
outstanding at July 31, 1999.
While the Company operated at a profit for fiscal year 2000, the
Company incurred a net operating loss of $363,000 in the fourth quarter of
fiscal 2000 and continued to incur operating losses in the first quarter of
fiscal 2001. Higher fuel costs, costs associated with the Company's continued
expansion of its vehicle fleet, increases in interest rates, marketing and
promotion expenses and decreases in higher margin mobile fueling business have
continued to affect operating results since year end.
In response to the losses incurred, the Company has taken a number of
steps to improve its operating results by reducing operating costs. The steps
taken include:
o Evaluations of individual customer profitability, with price and
service frequency adjustments implemented for unprofitable accounts.
o Significant reductions in driver overtime wages as a result of route
restructurings and combinations.
o Significant reduction in the sales and marketing staffs, along with
related expenses and promotion costs.
o Implementing a program to institute a 10% reduction in ongoing repair
and maintenance costs.
o Other cost reductions, primarily in the general and administrative cost
area.
The Company has outstanding borrowings of $7.7 million as of July 31,
2000 under its $10.0 million line of credit. This line permits the Company to
borrow up to 85% of the total amount of eligible accounts receivable. Based on
eligible receivables outstanding at July 31, 2000, the line was fully drawn as
of that date. Interest is payable monthly at 1.0% over the prime rate (9.50% as
of July 31, 2000). The line of credit matures on April 30, 2001 and is secured
by substantially all of the Company's assets. The credit agreement contains
customary covenants such as the maintenance of certain financial ratios and
minimum tangible net worth. As of and for the period ended July 31, 2000, the
Company was in compliance with the debt to equity requirement and had obtained a
waiver of its violation of the minimum tangible net worth covenant.
Custom fuel trucks are ordered in advance of need and require a minimal
down payment with the balance due upon delivery. It is expected that this
balance will be funded through a combination of available cash and financing. In
the past, the Company has financed approximately 85% to 95% of the purchase
price of fuel trucks. The Company is unable to estimate the amount of cash
required for the acquisition of fuel trucks as such amount is dependent upon the
terms and conditions of financing available, if any, to the Company at the time
of delivery. At July 31, 2000, the Company had a purchase commitment, to be
executed over the next month, for 1 custom fuel delivery vehicle costing
approximately $160,000. A significant portion of the Company's outstanding debt
bears interest at variable interest rates. The Company's financial results will
be impacted by significant increases or decreases in interest rates.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 1
LEGAL PROCEEDINGS
None.
ITEM 2
CHANGES IN SECURITIES
None.
ITEM 3
DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5
OTHER INFORMATION
None.
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: Financial Data Schedule: Ex. 27
(b) Reports on Form 8-K: None
10
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STREICHER MOBILE FUELING, INC.
September 14, 2000 By: /s/ Walter B. Barrett
-----------------------------
Walter B. Barrett
Vice President, Finance and Chief
Financial Officer
11
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
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27 Financial Data Schedule
